Entering ISO and NQ stock options...

[Jack McKinney]

    I have searched the documentation, the archives, and google, and could
not find it discussed anywhere how to track stock options.  I have a couple
of ideas, but was wondering how other people do it.
    At my company, I have stock issues through an employee purchase plan,
ISO options, and NQ options.  The stock issues are easy: Part of my paycheck
is escrowed and every 6 months, they issue stock from the escrow.
    So, I create a stock called "XYZ", and the transactions look like this
(removing most of the other cruft from the paycheck):

2003/01/01   Salary
           Income.XYZ Corp               ($100)
           Assets.SPP Escrow               $10
           Assets.Fed Inc Tax Escrow       $30
           Assets.Cash in Checking         $60

    This is repeated 12 times, so that on 2003/07/01, I have $120 in my
SPP Escrow account.  The company sells me stock at $7/share, though it is
trading at $9 (hence the benefit):

2003/07/01   SPP Purchase
           Income.XYZ Corp                ($34)
           Assets.SPP Escrow             ($119)
           Assets.Acme Brokers.XYZ  $9      17 XYZ  

    Done.  I know own 17 shares of XYZ stocks, and I have $1 left in the SPP
Escrow, which rolls over to the next period.

    Now the toughie, my options.  On April 1, they granted me 20 options
with a strike price of $12.  How do I enter this?  Specifically, how do
I enter it so that it reflects a positive asset if the stock is trading
above $12, but as ZERO if it is underwater?  For example, suppose I have
an account for options with two subaccounts: one is an Asset account
representing the stock, and one is a Liability account representing the
cost of purchasing the shares:

Acme Brokers.XYZ.Grant.Options     20 XYZ
Acme Brokers.XYZ.Grant.Cost     ($240)

    If the stock is trading at $15, then the value of the first account is
$300, and I can thus look at the Acme Brokers.XYZ.Grant balance and see that
my options are worth $60.  Hoever, if the stock is trading at $9, then the
value of the first account is $180, and my options _appear_ t be worth ($60),
when really they are worth $0: I am not obligated to pay the cost of the
options.  Thus, I do not want $60 to be substracted from my Net Worth.

    Ideas?  Would it be helpful for me to create a dummy gnucash file with
these transactions?

-- 
"What we observe is not nature itself, but nature  Jack McKinney
 exposed to our method of questioning.             http://www.lorentz.com
         -Werner Karl Heisenberg                   jackmc at lorentz.com
                                                   1024D/12C23A80 4096g/CA714907
-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/pgp-signature
Size: 240 bytes
Desc: not available
Url : /pipermail/attachments/20030808/22996717/attachment.bin